One certainty for South Africans has always been the volatility of the rand, which loses about 5.5% of its value against the dollar every year. Well, most of the time: since 2000 the currency has weakened in 16 years.
The rand was unusually strong from December 2001, when it almost hit R14, to late 2004, when it strengthened to less than R6. In October 2008, it reached nearly R12 before improving to about R6.50 in early 2011. So in the shorter term it hasn’t all been one-way traffic. But the trend has been clear, and South Africans have used periods of strength to place funds offshore, within the limits set by the Reserve Bank.
However, things may be changing. A simple metric of how many days the rand moved more than 1.5% against the dollar in a day shows that it happened on 24 days in 2022. In 2023 it happened 33 times, and in 2024 16 times. In 2025 and 2026, we have had only 12 days of a 1.5% move in either direction. In other words, volatility is certainly easing; a 24% trading range in 2022 has dropped to only 10% this year.
What makes this data even more striking is that 2026 has not been a gentle year, with the war in Iran pushing fuel, inflation and interest rates higher.
So why has the volatility decreased? And can it last?
There are several reasons. South Africa, though still in junk status territory, has had several ratings agency upgrades. We’re off the Financial Action Task Force’s greylist and we are one of the few countries globally with a primary budget surplus. We’re also benefiting from higher precious metal prices, which act as a stabiliser as the miners need to sell dollars to buy rand after they’ve sold their metal in dollars.
Another point in South Africa’s favour is our lower inflation rate. It was 4.3% for August, just below the midpoint of the target range of 3%–6% that we used to have. But we now have a 3% target with 1% flexibility on either side. If we got to our 3% target and the US got back to its 2% target, it would be a 1% difference, materially lower than the previous 2.5% difference under the old target range regime.
This matters, because in an ideal world the rand would weaken every year by that inflation difference. In other words, there would be a weakening of 1%, or about 16c, every year. Well below recent trends.
Can it last? I think it can. I think we’re seeing a real shift in how the rand acts — even though the currency had a seriously weak day as I wrote this.
Then what for investors? Well, the key point when looking at rand weakness is to expect less. A lot less. This stability will help both importers and exporters, and protecting themselves from rand volatility will be cheaper, as will just managing expectations.
Overall, a more stable currency is good for everybody, even if it feels weird at first.
